Budgeting costs: fixed and variable costs in your plan
Build up your costs line by line, with inflation or as a share of revenue.
Step 15 of 18: Online business plan
Video: how to budget the costs of your business in the Business Planner.
Revenue is an expectation, but costs are largely certain. The rent has to be paid every month, whether the calendar is full or not. That is why a financier looks closely at this part: are all the costs in it, and do they grow realistically over the years that follow? In the Business Planner, you build your costs line by line, grouped by category.
How to add a cost line
- 01
Description and category
Give the cost item a recognizable name and choose a category, such as premises, staff, marketing or IT. A short note helps when you check your plan later.
- 02
Growth model
Decide how the cost develops over the planning horizon. The four models are in the table below.
- 03
Amount, start and VAT
Enter the amount per month or per year, choose from which month the cost runs, and switch off VAT for exempt costs.
Four growth models
| Growth model | When do you use it? |
|---|---|
| Constant | The amount stays the same, such as a fixed subscription or a fixed fee for the accountant. |
| With inflation | The starting amount grows every year by a percentage you choose, for example for rent, energy or wage increases. |
| Per year | You set your own amount for each year, useful if you expect a step change in costs. |
| % of revenue | The cost moves with total revenue. Suitable for variable costs such as consumables. |
Cost lines from the salon
In the demo salon in Amsterdam, the rent appears as a cost line with yearly indexation, because the landlord adjusts the rent every year. Small supplies and laundry, such as towels, capes and foil, are a percentage of revenue: the busier the salon, the more it uses. At the top of the tab, you see the costs in year one, the total over the horizon and a split by category. Set that split against the profit and cost benchmark for your industry: if an item is far off, a financier will expect an explanation.
Costs that are often missing
- Employer costs: social security contributions, pension and holiday pay on top of gross wages.
- Wage costs from your staffing plan: check that the wages from the Staff module appear in your cost overview.
- Insurance: liability, contents and business interruption.
- Bookkeeping and accountant: bookkeeping, tax returns and the annual accounts.
- Software and subscriptions: booking, checkout, website and payment systems.
- Training: courses to keep your skills up to date.
With Manage categories, you rename or hide categories, or add one that fits your business better.